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North Adams Regional Hospital made $23 million profit in 2012, according to Massachusetts Nurses Association study

north adams hospital

People enter North Adams Regional Hospital Wednesday March 26, 2014, in North Adams, Mass. More than 500 people will be without a job, and patients across northern Berkshire County are seeking answers, following the Tuesday announcement that the hospital and affiliates will shut down on Friday. ()
(AP Photo/Berkshire Eagle, Ben Garver)

NORTH ADAMS — North Adams Regional Hospital grew its profit by 435 percent from $4.3 million in 2000 to $23 million in 2012, proving that the community can support a full-service hospital, the Massachusetts Nurses Association said Tuesday.

While the profit from patient services fluctuated year-to-year, that profit from patient services averaged $9 million and never fell below $4.3 million a year, proving that patient care in northern Berkshire County was always a viable business model, the Massachusetts Nurses Association said.

The Massachusetts Nurses Association prepared a 10-year study of finances at North Adams Regional Hospital and presented it to the community Tuesday night at one of the regular weekly meetings hosted in North Adams since the hospital abruptly shut down March 28. The report, nurses said, says that North Adams can support a full-service hospital.

"Taking care of sick people in that community was not the problem," said David Schildmeier, spokesman for the nurses union. "That bodes well for Berkshire Medical Center as it moves to reopen the emergency room and, we hope, the rest of the hospital. North Adams Regional Hospital can be a going concern."

The opinion meshes with what Gov. Deval Patrick told The Republican editorial board last week. Patrick, who has been working to restore services in North Adams, blamed debt, saying he doesn't fear closure of other community hospitals across the state.

Berkshire Health Systems, parent of Berkshire Medical Center, has plans to reopen the emergency room at North Adams Regional Hospital on or about May 19. In the meantime, Berkshire Medical Center is running a walk-in clinic at Massachusetts College of Liberal Arts and blood-draw stations serviced by Berkshire Medical Center's lab.

Advocates, the nurses included, want full restoration of hospital services at North Adams to include more than a emergency room such as diagnostic imaging, maternity and surgical wards.

That shutdown left 38,000 people in rural northern Berkshire County without a hospital and depending on emergency rooms more than half an hour away.

It also left 500 people, including about 100 members of the Massachusetts Nurses Association union, out of jobs.

At the time, management at North Adams Regional Hospital blamed falling reimbursement rates for government-payed insurance like Medicare and Medicaid. But the nurses say their study shows that $65 million in crippling debt incurred for expansions and renovations and the purchase of the Sweetwood Continuing Care Community and the Sweet Brook Transitional Care & Living Centers were the real culprit.

The nurses said public payers represented less than 65 percent of the payer mix at North Adams Regional Hospital, which is below the state average. The remaining 35 percent of North Adams Regional Hospital revenue comes directly from patients and their insurance companies. North Adams Regional Hospital also received higher payments from large insurance companies compared with its community hospital peers.

"What the data tell us is that NARH is less reliant on lower-reimbursing federal payers than most community hospitals, has a higher proportion of insured patients, and those health insurers are paying NARH more than they pay other hospitals," the report said.

The report also lays out the debts incured by North Adams Regional Hospital and its parent, Northern Berkshire Health Care.

In the report's words:

In 1996, North Adams Regional Hospital took on $12.8 million in revenue bond debt, in part to refinance older debt.

In 1999, NARH assumed approximately $25 million in debt to finance the purchase of Sweet Brook Transitional Care & Living Centers and Sweetwood Continuing Care Retirement Community – an alarmingly large assumption of debt which bore no connection to the provision of hospital services. This real estate investment scheme immediately began unraveling and the Sweets began costing NBH money. NBH then “took aggressive steps” – cutting staff and reducing operating costs in order to “lend money” to the Sweets.[4] Ultimately, NBH sold the Sweets in 2010 for $7 million under pressure from bondholders.

In 2004, NBH took on another $27 million in revenue bonds, in part to pay off a portion of the 1996 debt. The 2004 revenue bonds immediately went into default, as the organization could not meet some of the financial covenants required by bondholders.

Right up until the day NARH closed, the majority of NBH’s crippling debt service was not the result of expenditures related to the provision of patient care or even hospital capital improvements. Instead, the deep debt of purchasing the Sweets and the resulting significant annual operating losses incurred for the next ten years of operating the Sweets, were the primary factors contributing to NBH’s financial ruin.

A bankruptcy reorganization begun in 2011 and 2012 failed to discharge enough of the debt, according to the report.

North Adams Regional Hospital is currently in the process of bankruptcy liquidation. Berkshire Medical Center has an offer on the table to buy the hospital building and a medical building across town for $4 million.